The China Federation of Logistics and Purchasing’s official Purchasing Manager’s Index hit a seven-month high of 50.6 points in November, up from 50.2 in October.

Crude oil jumped to $US88.91 a barrel, the highest since October 19, as resurgent economic activity in China and the United States fuels investor optimism despite uncertainty regarding the fiscal cliff. Base metals including copper for three-month delivery gained on the London Metals Exchange, closing up 1.21 per cent at $US7995 a tonne.

But iron ore prices continued to spiral lower, shedding $US1.30 to close at $US115.60 a tonne, according to the Steel Index. Prices for steel and iron ore had improved in line with new factory orders and a more disciplined production profile in October but analysts say a lack of financing and an overly enthusiastic response to improving prices have capped gains.

London-based Deutsche Bank commodity analyst Michael Lewis warned the shale gas revolution in the US could restrict gains in oil. “The US has emerged as a new supply risk due to the rapid growth of shale oil; 2012 output far exceeded forecasts and the bias is to expect a repeat next year," he said. Mr Lewis said China’s Ministry of Industry and Information Technology’s plan to guide the gold industry could support precious metals prices. Spot gold fell 2.18 per cent for the week to $US1714.80 an ounce.

Australian gold sector specialists Surbiton Associates said disappointing production from big local miners prompted a decline in output during the September quarter to 62 tonnes. This result was two tonnes lower than the June quarter of 2012 and down almost five tonnes year on year, with Newmont and Barrick’s Super Pit in Kalgoorlie recording its lowest quarterly output in 4½ years. “The fall in production was disappointing, given the new operations that have just come on stream," Surbiton director Sandra Close said. “Many of the larger goldmines, mostly in Western Australia, had technical issues which reduced their gold output. Hopefully this situation will be short-lived."

Chinese companies have become increasingly active in gold sector merger and acquisitions, particularly in WA, as Beijing looks to diversify its foreign exchange holdings away from the troubled greenback. Dr Close said renewed interest from overseas investors in the Australian gold industry meant about 60 per cent and eight out of the 10 largest operations were now controlled by foreign companies.

“We need to determine why foreign investors put a higher value on our natural resources than do Australian shareholders," Dr Close said, adding that foreign players took a longer-term approach to value.